FBR Capital on Retailers/Dept Stores: First-Quarter Earnings Preview
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Up: 7 | Down: 5 | New: 18
Rating Summary:
9 Buy, 19 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 7 | Down: 5 | New: 18
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FBR Capital on Retailers/Dept Stores: First-Quarter Earnings Preview
FBR analyst says, "The first wave of retailers begins reporting earnings this week. Though retail sales reporting takes some of the surprise out of earnings, we still expect some divergence in trends with evident share gainers and losers."
"Macro trends are mixed, with employment trends improving by some metrics and retrenching by others. Gas prices remain in flux, as well, but are still well ahead of last year. And, weather has been a negative factor for sales."
"During the last month, apparel and footwear vendors have reported, and many beat expectations for the current quarter but guided below for the next quarter. This is a cautious read for the department stores."
"Macy’s (NYSE: M) reports on the morning of May 11. The company turned in a 5.4% comp for the quarter, well ahead of initial expectations for a 3% comp. We are carrying a consensus-matching $0.17. We believe M is taking share as a result of its merchandising and customer service strategies. Management's focus on the call will likely be these initiatives, whereas investors will want to talk about use of cash."
Kohl’s (NYSE: KSS) reports May 12 before the open. The company delivered a 1.3% comp-store sales gain for the quarter, missing its original guidance of 2%–4%. However, management said that it expected EPS of $0.73, at the high end of previous guidance of $0.68–$0.73. While it is impressive that KSS can make the bottom line despite missing comps, we believe investors are focused on the fact that the retailer under-comped both Macy’s and J.C. Penney(NYSE: JCP). Furthermore, while buyback is upside for some, KSS appears to need it to make the numbers."
"Urban Outfitters (Nasdaq: URBN) reports earnings on May 12 before the open. The company noted retail segment comps of negative low single digits for the quarter, which implies store comps of negative high single digits. We lowered our estimate to $0.24 from $0.25 for the quarter on April 28. We believe the focus of the call will be the timing of a fashion turn, as well as recent management changes."
"Nordstrom (NYSE:JWN) reports after the close on May 12. The company maintained strong momentum in the quarter, turning in a 6.5% comp that was about in line with its 4Q result despite more difficult comparisons. Our $0.71 EPS estimate is ahead of the consensus of $0.67. Our sense is that gross margins were up modestly and that SG&A leverage on strong sales was significant. The company had only a limited opportunity to buy back stock in the quarter due to the Hautelook deal."
FBR analyst says, "The first wave of retailers begins reporting earnings this week. Though retail sales reporting takes some of the surprise out of earnings, we still expect some divergence in trends with evident share gainers and losers."
"Macro trends are mixed, with employment trends improving by some metrics and retrenching by others. Gas prices remain in flux, as well, but are still well ahead of last year. And, weather has been a negative factor for sales."
"During the last month, apparel and footwear vendors have reported, and many beat expectations for the current quarter but guided below for the next quarter. This is a cautious read for the department stores."
"Macy’s (NYSE: M) reports on the morning of May 11. The company turned in a 5.4% comp for the quarter, well ahead of initial expectations for a 3% comp. We are carrying a consensus-matching $0.17. We believe M is taking share as a result of its merchandising and customer service strategies. Management's focus on the call will likely be these initiatives, whereas investors will want to talk about use of cash."
Kohl’s (NYSE: KSS) reports May 12 before the open. The company delivered a 1.3% comp-store sales gain for the quarter, missing its original guidance of 2%–4%. However, management said that it expected EPS of $0.73, at the high end of previous guidance of $0.68–$0.73. While it is impressive that KSS can make the bottom line despite missing comps, we believe investors are focused on the fact that the retailer under-comped both Macy’s and J.C. Penney(NYSE: JCP). Furthermore, while buyback is upside for some, KSS appears to need it to make the numbers."
"Urban Outfitters (Nasdaq: URBN) reports earnings on May 12 before the open. The company noted retail segment comps of negative low single digits for the quarter, which implies store comps of negative high single digits. We lowered our estimate to $0.24 from $0.25 for the quarter on April 28. We believe the focus of the call will be the timing of a fashion turn, as well as recent management changes."
"Nordstrom (NYSE:JWN) reports after the close on May 12. The company maintained strong momentum in the quarter, turning in a 6.5% comp that was about in line with its 4Q result despite more difficult comparisons. Our $0.71 EPS estimate is ahead of the consensus of $0.67. Our sense is that gross margins were up modestly and that SG&A leverage on strong sales was significant. The company had only a limited opportunity to buy back stock in the quarter due to the Hautelook deal."
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